US clothing and accessories retailer Gap has dropped plans to separate the Old Navy brand into a standalone public company.

In February last year, the company revealed its plan to separate its business into two new independent entities.

The decision for separation was dropped as Old Navy stores witnessed a decrease in sales in the recent quarter, reported CNN.

Gap interim president and chief executive officer Robert Fisher said: “The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brand.

“While the objectives of the separation remain relevant, our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation.”

The company has planned to operate Gap so that it complements the growth of Old Navy and Athleta.

As part of the restructuring, the company’s board is planning to appoint a new CEO to oversee the full portfolio of brands and corporate strategy.

Meanwhile, Banana Republic brand president and CEO Mark Breitbard has been elected to lead Gap’s specialty brands comprising of Gap, Banana Republic, Athleta, Janie and Jack, Intermix and Hill City.

Gap brand’s existing president and CEO Neil Fiske, who is also behind the separation, will depart from the company.

Fisher added: “The work we’ve done to prepare for the spin shone a bright light on operational inefficiencies and areas for improvement.

“Our board is focused on supporting this work and appointing new leadership with the appropriate experience necessary to lead a portfolio of retail brands and to support our transformation efforts.”